GAVAN REILLY: Getting to grips with housing’s big money problem
There’s often some mixed feelings when, as a journalist, you see a story you’ve been flogging for a while suddenly appear in another outlet and immediately set a new news agenda. Where were ye, lads?, says one part of your brain. Have you not been watching Virgin Media News point this out for two months now? On the other hand, though, it’s a reassurance of your own news radar: you were, after all, onto something.
So it was when the Sunday Independent splashed with news from a sensitive Cabinet memo, revealing that 32 per cent of the housing budget for the end of September hadn’t been spent as planned. The Budget intended for about €1.5 billion to be dished out for new housing construction in the first three quarters of the year; about half a billion hadn’t been.
An update for you: it got no better in October. By Halloween they expected to spend €1.8bn and managed just under €1.3bn. No cabinet memo needed on that front: it’s public domain information in the Fiscal Monitor published every month, which is why eejits like me are able to report it on the telly for the last few months.
Anyway. Why the underspend? Leo Varadkar’s answer to me on Newstalk was that capital spending can sometimes be “lumpy”, and that’s true. By its one-off nature, a building project doesn’t entail spending that dribbles out at a regular flow – rather it comes in clumps, so projects already started might only end up appearing in the books at a later point.
But remember too: these Fiscal Monitors are published every month, and the ‘lumpiness’ doesn’t seem to add up. The underspend has been standing at about half a billion every month for the last three. That’s not a sign of lumpy spending which is simply waiting to be put through the rigours of government accountancy: it’s evidence of something systematic where the government simply isn’t able to get the money out for one reason or another. It may be something easily explained like supply chain disruption – you can’t spend money if you can’t get the products you need – or it may be something more intuitive, like a lack of labour to deliver all the housing the country is supposed to need.
It's hardly surprising though that there’s so much talk of young people considering upping sticks and leaving the country, such are the challenges of affording a roof over your head. Thinking objectively, why wouldn’t you? How messed up is it that a country with full employment, where incomes are rising and taxes are falling, is also one with nightlife ebbing away, with an insanely high cost of living, that young people aren’t sure if they’d stay?
Incidentally, be wary of anyone who tells you they can make housing more affordable. We’ve had a few phases now of massive building in this country, none of which has ever made housing any cheaper (the opposite, in fact, during the Celtic Tiger). At a certain price point, building simply wouldn’t happen – the underlying costs of building are still too high. Scaling up construction is a necessity but offers no guarantee that the resulting homes are within arm’s reach.
And don’t just believe me: if you ask them, even the opposition will admit it.